Comcast as A Wireless Provider
Comcast to focus on offering wireless cellular services to their 27.7 million cable TV & Internet customers. They will also leverage access to their 15 million Wi-Fi hotspots. Longer term, Comcast may leverage access to content on the NBC Universal side of the business. Comcast for Business may become a telecom disrupter.
Comcast: Your wide-area, wireless services provider. On one hand, thinking of Comcast as your wireless network services provider seems outrageous. What do they know about running a wireless business (other than owning over 15 million Wi-Fi hotspots)? On the other hand, because they have an arrangement to use the Verizon Wireless network, it makes great sense for them to provide current customers with cost-effective packages for cable, Internet, telephone and wireless.
Brian Roberts, Comcast CEO, recently said they plan to exercise their option to utilize the Verizon Wireless network at defined (wholesale, reseller) prices and begin cellular wireless services by mid-2017. You can be assured that Comcast negotiated favorable pricing. Roberts said that they are going to focus on marketing wireless in areas in which they have already significant customers.
Comcast now has a total of 22.3 million video customers, 23.3 million internet customers, and 11.5 million phone customers; a total of 27.7 million unique customers. Internet access customers have surpassed video customers for the first time. The company reported 89,000 net additions in Q4 of 2015, which was Comcast’s best result on the video subscriber front in the past eight years. The broadband business continued to do well, adding 460,000 in the quarter and 1.4 million for the year. Comcast’s total customer base increased by 281,000 in the quarter and 666,000 for 2015. Here’s the chart that shows historical TV subscribers vs. internet subscribers. (The crossover was bound to happen.)
Now, with these sizable customers in both cable TV, Internet and telephone access, it gives Comcast the opportunity to offer wide-area wireless broadband to a large base of families and businesses. Think of walking into a Comcast store, ordering your cable TV and, by the way, they have the new iPhone 7 as well. They can offer cable TV, Internet access, home phone and wireless phone service in one convenient plan. It will become a new “quadruple play” plan from Comcast. One note of caution: Comcast is limited, at least initially, to selling cellular wireless and devices as part of an overall Comcast (Xfinity) package – not standalone. But customers can certainly ‘tack on’ a wireless device and plan to an existing customer’s account. This is especially true for the Comcast for Business customer who might want to save on the cost of providing internet to the employees, plus mobile phone and wireless services. While most organizations keep their telecom providers in place year after year, perhaps Comcast may have the ability to get some consideration for organizations to change telecom and mobile service providers. Interesting.
All of this is going to increase the stickiness of Comcast with the customers who sign up for such plans. Another example: they just struck a deal with Netflix to offer it directly through the Comcast X1 system. Turn on your TV and dial into Netflix. Examples like this will be very attractive to customers.
One of the Comcast hidden gems is their footprint of over 15 million Wi-Fi hotspots in the U.S. Comcast (and especially the Comcast for Business division) can leverage these hotspots and provide shared access that serves as an additional benefit for signing up for their wireless cellular plan. For example, Comcast cellular subscribers can download video at no additional charge if they are using either the Wi-Fi broadband in their home or using any one of those 15 million Comcast Wi-Fi hotspots. In addition, they can extend Wi-Fi calling to their hotspots, which will offload the burden on the Verizon Wireless cellular network.
Comcast isn’t trying to become the largest wireless operator in the U.S. However, they certainly could have over 10 million wireless broadband customers within a few years; and we could see Comcast becoming the fifth-largest wireless operator behind Verizon, AT&T, Sprint and T-Mobile.
Another hidden gem for Comcast is their access to NBC Universal content. It would seem reasonable that Comcast could provide preferred access to movies, TV shows and music to customers. While Comcast hasn’t announced anything yet, it seems obvious that they will leverage all of that content at some point.
Roberts has stated publically that one of the reasons they are moving forward in wireless is because cable subscriptions have stalled. More to the point, their cable subscriptions declined for many quarters through most 2015 but turned positive in the fourth quarter of last year, thus, bucking the recent trend.
Comcast can offer wireless bundles that might be very competitive when looking at just wireless subscriptions alone. Thus, Comcast has a resource in their partnership with Verizon whereby they can begin to offer cellular wireless services next to their existing (consumer and enterprise) cable services. Let’s say a wireless plan might cost $100/mo. for four lines. Comcast could offer that same plan plus basic Internet access or basic cable TV for the same fee. Or, they could provide cable subscribers who are paying $150 per month for cable TV, Internet access and home phone service with a wireless plan for just $50 per month extra, which would save a lot of money for the Comcast customer.
Is Comcast becoming a true Mobile Virtual Network Operator (MVNO) through this relationship with Verizon Wireless? Because Comcast is required to only offer mobile devices and services as part of a bundle, Comcast is not becoming a true MVNO. Consumer or business customers cannot buy wireless devices and services standalone.
However, there are some very real potential benefits once Comcast begins offering wireless broadband services. For one, it will enable Comcast to gain additional, new incremental business customers that they didn’t have before. For the enterprise, it offers the possibility of getting a better rate for wired broadband combined with wireless cellular services. For the market, it offers more choice and expands competitive offerings.
On a personal, individual level, it offers the convenience of an employee being able to easily stay connected at both work, while traveling locally via the Comcast Wi-Fi hotspots, and at home. I would expect them to combine security with such an offering to protect the user when connecting through Comcast.
I find it interesting that Verizon Wireless may end up competing for large enterprise with Comcast but, more than likely, they may join forces and provide an integrated set of access services to such accounts. As for AT&T, they won’t have to worry in places where Comcast does not have a large cable footprint. There may be ‘spot competition’ in large metropolitan areas.
One of the more interesting things about this entire offering is whether Comcast can become a major disrupter in the telecom space. It’s hard for anyone to make inroads, but Comcast has the muscle and the ability to make it very worthwhile for businesses to switch. Companies tend to keep their telecom provider year after year without much thought about changing to a new provider. And then, Comcast comes along and makes new integrated “four-pack” offerings that many others can’t… and at really attractive prices. This is going to get the attention of telecom managers in the enterprise. It could be that in five years, Comcast is sitting at the table next to AT&T, Verizon and others for enterprise business. Some will ask, “How in the world did this happen?”
Overall, I welcome Comcast to the cellular (consumer and business) wireless world. While Comcast doesn’t (yet, anyway) own any wireless network infrastructure, it brings a formidable competitor to market that will likely become a major force in mobile and wireless over the coming years.